South Korea’s early exports surge as AI boom fuels chip demand

[SEOUL] South Korea’s exports extended their growth momentum in early February, driven by resilient semiconductor demand even as trade uncertainty persists over US tariff policy.

Exports adjusted for working-day differences climbed 47.3 per cent from a year earlier in the first 20 days of February, customs office data showed on Monday (Feb 23). That compares with a revised 34 per cent gain for the full month of January.

On an unadjusted basis, shipments increased 23.5 per cent, while imports rose 11.7 per cent, resulting in a trade surplus of US$4.95 billion.

February’s headline trade figures came in strong despite fewer working days due to the three-day Chinese New Year holiday falling within the reporting period, suggesting export momentum remained robust even after adjusting for calendar effects.

Semiconductor exports climbed 134 per cent, extending solid gains driven by investment in artificial intelligence (AI) and data centres. Shipments of computer peripherals and petrochemical products rose 129 per cent and 11 per cent, respectively.

Meanwhile, auto exports fell almost 27 per cent, while auto parts shipments dropped about 21 per cent, reflecting ongoing adjustments to the US tariff regime.

The performance suggests South Korea’s export engine remains supported by the global AI cycle, cushioning weakness in other sectors. The World Trade Organization’s director-general said last month that the rapid acceleration of AI may underpin global merchandise trade this year, helping overcome US tariff headwinds.

The data come as global economies face renewed uncertainty over US trade policy after the Supreme Court struck down tariffs imposed under emergency powers. US President Donald Trump has since moved to raise the global tariff rate to 15 per cent under a different authority, leaving the effective ceiling for South Korean goods largely unchanged. Sector-specific duties on autos and steel also remain in place under a separate framework.

South Korea said that it will continue implementing the existing US-Korea tariff agreement and seek to preserve the balance of interests secured under the deal. The Blue House acknowledged that the court ruling adds uncertainty to the global trade environment but stressed that the government will prioritise national interests while closely monitoring developments.

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Currencies remain a key swing factor. Although the won has strengthened so far this year, it remains more than 6 per cent weaker since last summer, adding uncertainty to the export-driven economy and clouding the inflation outlook.

Consumer prices rose 2 per cent in January, in line with the Bank of Korea’s (BOK) target, with policymakers citing currency volatility as a risk to price stability.

The BOK held its benchmark rate at 2.5 per cent in January, maintaining a neutral stance as officials assess trade risks, household debt and inflation pressures. The central bank is widely expected to keep policy unchanged when it meets on Thursday.

By destination, exports to China rose almost 31 per cent, while shipments to the US increased 22 per cent. Exports to the European Union and Taiwan both gained 11.4 per cent and 76.4 per cent, respectively. BLOOMBERG